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#224332 - 08/05/04 08:49 PM Triggering term
Ninky Offline
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Ninky
Joined: Nov 2002
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Is this a triggering term: "Enjoy a competitive rate and a monthly payment as low as $25 a month." I remember some class or seminar saying that if the phrase "as low as" were included, that would not qualify as an actual payment amount and would not require additional disclosure. Is that correct?

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Lending Compliance
#224333 - 08/09/04 07:16 PM Re: Triggering term
OnTheEdge Offline
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SmallTown, USA
I would consider it a triggering term. I did some research some time ago about the quote "terms up to 30 years". Don't remember specifics, but there was something in the commentary that persuaded me to define this as a triggering term. Applying the same standard I think, "payments as low as $25" would be a triggering term.
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#224334 - 08/09/04 07:29 PM Re: Triggering term
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
OSC 226.4(c)(1)

3. Payment amount. The dollar amount of any payment includes statements such as:

• "Payable in installments of $103."

• "$25 weekly."

• "$1,200 balance payable in 10 equal installments."


In the last example, the amount of each payment is readily determinable, even though not explicitly stated. But statements such as "monthly payments to suit your needs" or "regular monthly payments" are not covered.

IMO, "payments as low as $xx" is not a triggering term by itself. There is nothing in the statement that can be "readily determinable".
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#224335 - 08/10/04 03:08 PM Re: Triggering term
OnTheEdge Offline
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SmallTown, USA
After re-reading Reg Z Commentary 226.24(c), I guess I am being ultra-conservative, but I would still consider a triggering term.
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#224336 - 08/10/04 07:08 PM Re: Triggering term
Queen Mum Offline
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Queen Mum
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Posts: 3,920
OK
Since we are on the subject of 'triggering terms'...we are introducing a new home equity line. Is there a problem with listing in advertising that there is "no closing costs"?

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#224337 - 08/10/04 07:46 PM Re: Triggering term
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Look to the OSC for 226.16(d)(4).
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#224338 - 08/10/04 08:41 PM Re: Triggering term
Queen Mum Offline
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Queen Mum
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OK
So are you saying this falls under 'tax implications'? Anyone else use the statement "no closing costs" in your ads and not been criticized?

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#224339 - 08/10/04 08:54 PM Re: Triggering term
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
Quote:

So are you saying this falls under 'tax implications'?






16(d) Additional Requirements for Home Equity Plans

226.16(d)(4):

4. Misleading terms prohibited. Under §226.16(d)(5), advertisements may not refer to home equity plans as free money or use other misleading terms. For example, an advertisement could not state "no closing costs" or "we waive closing costs" if consumers may be required to pay any closing costs, such as recordation fees. In the case of property insurance, however, a creditor may state, for example, "no closing costs" even if property insurance may be required, as long as the creditor also provides a statement that such insurance may be required. (See the commentary to this section regarding fees to open a plan.)
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The opinions expressed are mine and they are not to be taken as legal advice.

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#224340 - 08/10/04 09:13 PM Re: Triggering term
Queen Mum Offline
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Queen Mum
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OK
Thanks so much!

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#224341 - 10/25/04 07:31 PM Re: Triggering term
Becki Offline
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Joined: Oct 2004
Posts: 5
I know this is an old "chestnut" but, if we are offering a "skip" month for our existing customers thru lobby signs and a brochure, is the one time fee charged a trigger? We disclose that interest will continue to accure and their final payment may be larger.

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